U.S. Family Health Plan too costly, watchdog report says

Jul. 31, 2014 - 06:03PM
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A popular health care program that serves more than 130,000 military family members and retirees is redundant and should be eliminated, the Government Accountability Office says.

The U.S. Family Health Plan, an association of six health care companies that provides Tricare Prime to military beneficiaries in 15 states and the District of Columbia, costs the Defense Department more than $1 billion a year, and its unique nature restricts DoD from maximizing use of military hospitals and clinics, GAO officials wrote in a report released Thursday.

The program, known as USFHP, became part of the military health system in 1982 when Congress transferred ownership of some U.S. Public Health Service hospitals to the current organizations and allowed military beneficiaries to continue receiving care at the facilities.

When Tricare was created, Congress required USFHP health care companies to provide Tricare Prime — the military’s health maintenance organization-style program — to its military patients.

According to the USFHP Alliance, the programs had an overall member satisfaction rating of 93 percent in 2013.

But USFHP’s geographic overlap with existing Tricare Prime regions make it a target for elimination, GAO official Debra Draper said.

According to GAO, four of USFHP’s six member organizations have more than 80 percent of their ZIP codes in areas where the Defense Health Agency offers Tricare Prime through military hospitals and clinics.

“Congress should terminate DoD’s authority to contract with the USFHP designated providers in a manner consistent with a reasonable transition of affected ... enrollees into Tricare’s regional managed care program or other health care programs as appropriate,” Draper wrote.

GAO also said cutting the program would save money by eliminating added costs and overhead.

In response, Assistant Secretary of Defense for Health Affairs Dr. Jonathan Woodson agreed with the facts of the GAO report but deferred to Congress to consider the recommendation to end the program because that would require a change in law.

In comments addressing the report, however, Woodson made not-so-thinly veiled clarifications that indicate the Pentagon would support eliminating USFHP.

According to Woodson, the USFHP contract violates DoD policy on competitive contracting, represents duplication in services that adds cost, restricts the Pentagon’s ability to promote efficient use of its direct care system and draws benefits away from “more cost effective” military facilities.

“Should Congress decide to eliminate this statutorily-required program, it will be important to make provisions to carefully transition” the USFHP beneficiaries to other federal programs, Woodson wrote.

Dr. David Howes, president and CEO of USFHP participant Martin’s Point Health Care in Maine, said Thursday that the alliance knew GAO was examining the program but is “incredibly disappointed” with the outcome.

“We believe very strongly that this is the model of health care for the future. ... We are duplicative in that we serve the same area but not the same in how we operate and take care of our members,” Howes said. “We approach the care of patients in the same way the original HMO concept was intended, looking at the population and doing everything we can to improve their wellness.”

According to Howes, by law, the USFHP program can’t cost more than other Tricare programs, raising the question of whether DoD really would reap savings as projected in the report.

“There’s no conversation [in this report] about quality, about patient experience ... and I believe the financial analysis is incorrect, because these people are still going to be in programs and are still going to have the cost they would have if they weren’t in USFHP,” Howes said.